NAUGATUCK — The borough saw its bond rating increase as 2013 came to a close.
Robert Butler, who is the controller for the borough and school business manager, informed the Board of Mayor and Burgesses during its Jan. 7 meeting that Standard & Poor’s Financial Services increased the borough’s bond rating from AA- to AA in December.
The borough also has an AA rating from Fitch Ratings, a global ratings agency.
Butler said the increase is for the general obligation bonds, which is the majority of the bonds the borough has outstanding.
“This is very good for the borough in that it is saying we are credit worthy and that our bonds are a good investment,” Butler said.
Mayor Robert Mezzo credited the borough’s finance board and financial department for the increase
“I think it’s a reflection of a long and sustained commitment to fiscal responsibility on behalf of many finance board members over the years and our finance department,” Mezzo said.
Mezzo pointed out that this is the second time the borough’s credit rating has increased in three years.
Butler said the borough’s rating also went up due to its pensions being nearly funded and the creation and funding of an Other Post-Employment Benefits account. This account is for monetary obligations the borough has to pay in connection with retired employee benefits.
“This is something most towns have not done,” Butler said of the account. “We just started, but the fact we have started is a positive.”
Mezzo compared the bond rating to a person’s credit score. The better a person’s credit score, he said, the better rate that person will receive when borrowing money.
The most visible impact of the increased rating will be the better rates the borough will be able to receive once the renovations at Naugatuck High School are completed and the long-term bonds are fixed, Mezzo said.
The borough has already begun to see the benefits of a high credit rating. The borough recently refinanced its two general obligation bonds, worth a total of $18 million, at a lower rate.
Butler said that refinancing these bonds should save the borough between $1.1 million and $1.6 million.
The borough is now two steps away from an AAA rating, which is the highest rating that a municipality can receive.